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Budget 2018: what has Hammond pledged for the industry?

Philip hammond
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Chancellor Philip Hammond has unveiled a handful of housing policies in his autumn budget as well as announcing the abolition of PFI contracts and more help for first-time buyers

The chancellor also confirmed that the cap on council borrowing would be lifted immediately (29 October), a measure announced by the prime minister Theresa May in her Tory party conference speech.

Announcing an end to PFI contracts – the controversial funding model put in the spotlight following the collapse of construction giant Carillion – Hammond said the days of the public sector ‘being a pushover’ must end. Hammond added that he would be launching a post-PFI funding ‘centre of excellence to actively manage these contracts in the taxpayers’ interest’.

He said: ‘I can announce that the government will abolish the use of PFI and PF2 for future projects putting another legacy of Labour behind us.’

Former RIBA president Jack Pringle, who lobbied against PFI contracts during his presidency (2005-2007), said: ‘It’s great to hear a chancellor go on record, at last, as to what an appalling deal it was.

‘The public sector has been systematically stripped of skills since Thatcher’s days so Hammond’s centre of excellence will have to rebuild them. We need a clear, accessible funding system and a delivery mechanism which is not just pulling down a design and build crew from a framework.’

Current RIBA president Ben Derbyshire added: ‘The end of PFI will be welcomed by many RIBA members – I hope that the government will now look more closely at how the public sector procures new buildings to ensure that we learn the lessons of PFI and put quality and real value for money at the heart of the process.’

Responding to confirmation that local authorities’ Housing Revenue Account cap would be scrapped, Derbyshire said: ‘This predicted £4.6 billion boost has the potential to enable ambitious councils to deliver new, affordable homes.’

Cash for homes

Hammond also unveiled measures to boost housebuilding, including an additional £500 million for the Housing Infrastructure Fund, a pot of cash local councils can apply to for help with building.

The government said this would help build 650,000 new homes, with another 13,000 unlocked through nine new ‘strategic partnerships’ with housing associations.

To encourage more small and medium-sized enterprises to build houses, Hammond also promised up to £1 billion of British business bank guarantees. 

Money will also be provided to help up to 500 neighbourhoods allocate land for housing and sell the homes to local people at a discount.

Last year the chancellor abolished stamp duty – a tax paid when buying property or land – for first-time buyers purchasing a home worth up to £300,000.

This year’s budget has extended this to shared ownership homes worth up to £500,000, and will be backdated to anyone who has bought one since last year’s budget.

Plans were also announced to rejuvenate the high street by converting unused shops or offices into homes.

Landbanking review

In his speech to the Commons, the chancellor also announced the publication yesterday of Oliver Letwin’s review of build-out rates, which concluded that large housebuilders are ‘not engaged in systematic strategic land-banking’.

The report recommended handing local planning authorities powers to compulsorily purchase land to provide affordable housing and masterplan larger sites above 1,500 homes to ensure greater diversity of tenures.

The report suggests this could be overseen by a new ‘National Expert Committee’ which would have powers to adjudicate in disputes between authorities and developers and offer advice.

Letwin also recommended that the RIBA was one of the organisations represented on the panel.

No green measures

However the budget was thin on measures to tackle environmental issues with the UK Green Building Council criticising the ‘absence of any substantial clean growth measures’.

The council’s chief executive Julie Hirigoyen said the scrapping of enhanced capital allowances would make it harder for companies to invest in energy-efficiency improvements.

‘This is at odds with the scale of the climate challenge and the urgency with which it needs to be tackled,’ she said.

Reaction

Kate Henderson, chief executive of the National Housing Federation (NHF) The chancellor’s announcements on housing today are not the wholesale changes needed to fix our broken housing market. We desperately need tens of thousands more social homes to be built every year, which is why we are disappointed that the government has missed a real opportunity to overhaul how land is sold.

Julie Hirigoyen, chief executive at UK Green Building Council Three weeks after the IPCC’s landmark report highlighted the urgent need to tackle climate change and the subsequent ambitions announced by the Minister for Energy and Clean Growth, this budget is notable by the absence of any substantial clean growth measures. Indeed, a number of important policies have been hit, with the scrapping of Enhanced Capital Allowances, making it harder for companies to invest in energy efficiency improvements, and the Chancellor signalling his intention to weaken Carbon Price Support. This is at odds with the scale of the climate challenge and the urgency with which it needs to be tackled.

Key housing announcements

  • An additional £500 million to the Housing Infrastructure Fund to unlock 650,000 new homes
  • Confirmation the borrowing cap on local authorities will be scrapped
  • The abolition of PFI and PF2 contracts (existing contracts will be honoured)
  • Strategic partnerships with nine housing associations to deliver 13,000 homes 
  • Up to £1 billion of British Business Bank Guarantees to support the revival of SME housebuilders
  • Loosening of Permitted Development Rights to make office-to-resi conversions 
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